12.10.2010

The Senate unveiled final details of a broad tax bill—and its 10-year price tag of $858 billion—and began debate Thursday night on the package, a significant step after two years of gridlock over how to treat expiring tax cuts enacted under former President George W. Bush. Without action, income taxes on nearly every American are due to rise on Jan. 1.

Comment: I'm conflicted with the tax proposal. Hey I don't want to pay more taxes (I've appreciated the Bush tax cuts myself). The 2% SS 1 year tax holiday would be nice - I would take that money and invest it! I'm concerned that letting the Bush tax cuts expire will in essence be a tax increase for every American and that a tax increase is not exactly what our economy needs. But I am concerned about that debt clock that keeps clicking every upward. Someday either we will have to pay or our country will collapse! See the Concord Coalition statement about this. Here:

The Concord Coalition said today that if the tentative agreement to extend expiring tax cuts for two years is approved, it should be followed by a major push to reform the tax code.

This effort should begin promptly with the Fiscal Year 2012 budget process and should incorporate the base-broadening suggestions recently made by the President’s National Commission on Fiscal Responsibility and Reform and the Bipartisan Policy Center’s Debt Reduction Task Force.

Extending the tax cuts for two years, along with the proposed one-year payroll tax reduction for workers, will provide breathing room for the economy to recover. It comes at a high price, however, and must not distract from efforts to put longer-term deficit-reduction plans in place.

“The single best way to keep the momentum on deficit reduction is to move forward immediately on fundamental tax reform,” Concord Coalition Executive Director Robert L. Bixby said. “The recent reports from two commissions have shown that it is possible to get bipartisan agreement on a plan to simplify the tax code, lower rates and raise needed revenues. If the President and Congress pursue this goal in the upcoming budget cycle, it would be good for both short-term economic recovery and long-term deficit reduction, which is exactly what is needed.”

The proposed two-year extension of the tax cuts enacted in 2001 and 2003, together with measures to protect more middle-class taxpayers from the Alternative Minimum Tax, would mean an estimated revenue loss of more than $500 billion. The one-year payroll tax reduction would cost $120 billion. The temporary continuation of other tax breaks and an extension of emergency unemployment benefits through 2011 would cost a substantial amount of money as well.

The Bipartisan Policy Center plan proposed a full payroll tax holiday for workers and employers for one year. At the same time, however, that plan would phase in a new, more efficient, tax code in which most exemptions, credits and deductions would be eliminated or reduced in a progressive manner, in exchange for lower tax rates. The overall effect would be to raise revenues. A similar strategy of broadening the tax base and lowering rates was recommended by the President’s commission.

The Concord Coalition has said that Congress should not approve any permanent tax cuts that are deficit-financed.